Tuesday, August 19, 2008

Government Projects do not "Create Jobs" (Isaac Morehouse)

Isaac Morehouse says don't believe the myth that state "job creation" actually gives a "boost to the economy":

Yesterday while driving I heard an ad on the radio promoting more state spending on roads. Besides being a bit overreaching ("Is my family really safe with our current roads?") the idea of better managed and maintained roads makes some sense and I thought the ad had a decent point — especially as I rumbled over potholes and hoped not to end up in a major traffic jam like last week.

There are potential improvements that can be made to Michigan's roads just by changing how things are run (and who runs them) without necessarily increasing road spending. Additionally, there are many ways the state could do the same things for less money. (Check out this Mackinac Center study.)

The radio ad made the point that better roads are safer — OK. Then it said better roads make it easier for businesses to operate in the state — fine. But it committed a logical and economic error when it claimed, "State spending on road projects will create jobs and boost our economy." That's only half of the story.

State projects may create jobs, but the proper question is, do they create wealth?

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